Good news: IDC just raised its estimate for IT spending by small and midsize businesses.
The market watcher now expects worldwide SMB spending on IT to reach $568 billion this year. The United States alone should account for $171.3 billion, IDC says, for about 30 percent of the total.
And by 2021, the market watcher predicts, worldwide SMB spending on IT will top $676 billion. If so, that would mark a compound average growth rate (CAGR) of 4.5 percent.
That, in turn, is 0.3 percent than IDC’s earlier estimate. Last November, IDC predicted that worldwide IT spending by SMBs would have a 5-year CAGR of 4.2 percent.
Ray Boggs, IDC’s VP of SMB research, also points out that the newly estimated rate of growth is about 2 percentage points higher than GDP growth across regions. That’s good.
Even better, Boggs says, is the way SMBs are changing the way they use IT. The new goals for IT, he says, are improving both worker productivity and competitiveness.
Biz services growing faster
While this rising tide should lift all boats, some sectors of the SMB IT market will grow faster than others. IDC predicts that from 2016 to 2021, IT-related business services will grow the fastest, with a 5-year CAGR of 7.1 percent.
Next fastest, the market watcher predicts, will be SMB purchases of software. That sector is forecast to have a 5-year CAGR of 6.9 percent.
That will be followed by IT services, with a forecasted 5-year CAGR of 3.7 percent.
The slowest-growing sector? That would be IT hardware. There, IDC predicts a 5-year CAGR of just 1.8 percent.
Follow the money
Looking at software alone, IDC expects a third of all SMB purchases this year will go to just 3 categories: enterprise resource management (ERM), customer relationship management (CRM) and content applications.
Hardware spending by SMBs this year will be led by PCs and peripheral devices. These devices, IDC predicts, will account for nearly 45 percent of the total SMB hardware spend this year.
And among services, business services are forecast to grow about twice as fast as more conventional IT services. It’s also the smallest sector by projected dollars.
By the way, when IDC says SMB, it means any organization with fewer than 1,000 employees. It defines small companies as those with 1 to 99 employees; midsize, as those with 100 to 999 employees. And the market watcher’s figures include all IT-related hardware, software and services, including IT-related business services.
How about you? Are you seeing increased demand from your SMB customers? We welcome your comments below.